Until now, companies engaged in network build-outs for wireless communications facilities follow a similar if not identical method for acquiring the use of land necessary to establish their networks. Site selections are determined by dropped call rates as well as the quality of reception. We have all seen the clever “Can you hear me now?” ads used by Verizon Communications. In fact, this is one of the methods that are used to determine what locations are needed for the development of networks. Once general areas of need are determined, a radio frequency engineer establishes a range of acceptability within each general area by drawing a circle on a topographical map that indicates the area within which a site should be located in order to establish the best possible coverage to create a seamless communications network.
The next step is to find the best site within the given range, topography and proximity to major roads considered, and then identify what specific property within that range best satisfies the need. It must be noted that there are instances when a property owner who believes his or her property would be a suitable site will make the first inquiry, but in most instances “locators” are sent to approach the property owner first, having knowledge of a specific need.
In virtually all cases, the companies engaged in site development will make the first offer by disclosing an industry standard or in other words, “a typical lease arrangement”. This disclosure will include a range of rent and will then set the starting point and course of the negotiation to acquire the rights to use the prospective site. The industry standard has generally been to offer a three to five year lease with renewal options as far out as approximately 30 years. Rents offered will vary from locale to locale and are directly affected by the population density and or amount of traffic (customers).
Wireless companies generally cooperate with each other as it relates to sharing locations. This is primarily due to the Government's desire to restrict the number and placement of cell towers and the initial capital outlay required to develop a new site. These considerations make it mutually beneficial to share locations. Therefore, companies will sublease locations to each other and collect rents commonly referred to as co-location rent. Thus, it is also common for co-location rent to be paid to property owners, in addition to lease payments, whereby the revenues generated from subleases to other companies using the same facility are shared with the property owner.
The aforementioned practices are common in the industry and represent a major flaw in how long term property rights are acquired for desired locations. The current method readily accepts long-term balance sheet liabilities without resistance. Accordingly, these long-term liabilities either grow or diminish proportionately with network expansion and place wireless companies in demonstrably weakened financial positions. What is needed is a property acquisition method and strategy that purposefully seeks to eliminate or reduce these burdensome long-term financial obligations currently experienced by the companies that have been engaged in the aforementioned prior art practices. In particular, there exists a need for a rent reduction strategy, less costly methods by which parcels of land are acquired for wireless network build-outs.